Changes in the occupational pensions regulation may appear to be good news for IFAs, however, Abbey warns of hidden dangers leading to a ‘poisoned chalice'.
Government proposed amendments to the transfer value regulations for occupational pension schemes suggest trustees of schemes being wound up but where the employer is solvent will be obliged to advise members - who want to take a transfer value out of the scheme - to look for independent financial advice.
According to Abbey, however, IFAs will have to self determine issues which as yet are not totally clear, such as future employer contributions to the scheme and movements in the value of the scheme assets.
The Government has encouraged members to seek financial advice within these circumstances, in the knowledge that transfer values could change, for a number of reasons, during the winding up process, to a diferent level of payment after the process is complete.
Such reasons include an employer making good any deficit, changes to investment market conditions and long-term interest rates.
Tom Walsh from Abbey for Intermediaries says: “This encouragement to seek independent financial advice may at first sight seem good news for IFAs. But on more sober reflection, there are many imponderables involved, making it nearly impossible to give clear, unequivocal advice.”IFAonline
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From 6 April 2019